When and How Fundraisers Should Suggest How Much to Donate

When fundraisers for charitable or nonprofit organizations reach out to potential donors, either online or by direct mail, they often present a list of suggested donation amounts. Often these are opt-in, meaning donors choose the amount they wish to contribute from a list of possible amounts. But could these fundraisers be harnessing the power of opt-out “default” options to improve their results? Or could setting one of the donation amounts as a default amount backfire, reducing the funds raised? Our research suggests that fundraisers might be overly apprehensive about using defaults, especially high default amounts, in their communications. But for defaults to be effective, they need to be created with the context and goals of the campaign in mind.

In fundraising, as in other contexts, an opt-out default is a pre-selected option (often a checkbox) in a menu of choices. Defaults have been found to change people’s choices, including increasing organ donations and 401(K) savings and bolstering choices of environmentally friendly products. But charitable solicitations are different because the recipient has two decisions to make: first, whether to participate and second, how much to give. Setting a default option can affect each of these decisions in different ways.

We ran several randomized experiments in controlled lab settings, varying which option, if any, was set as the default. We measured the effect of the default on people’s willingness to donate in different contexts, varying both how well-known and trustworthy the charity was, and the information people had about the charity. We then tested our conclusions in a large-scale field experiment with the Booth School of Business’s alumni fundraising campaign.

First, our studies found no evidence that introducing a default reduced the amount of money raised, even when the default was a large donation. Defaults did not cause a negative perception of either the specific charity or of donating in general. These results are particularly striking in view of the fact that more than half of the charities on a recent Forbes Top 50 list do not use a default in their online solicitations, and most of those that do (86%) set one of the lowest amounts as the default.

Second, we did find that setting low or high amounts as the default had very different effects on donation decisions. When a low amount (less than the median donation people typically gave) was set as the default, it encouraged potential donors to participate. The low default amount allowed people to enjoy the good feelings that come with being a donor, at a low cost. In situations where potential donors need to be motivated to participate, setting a low donation could result in more returns by bringing in more donors.

In contrast, when a high amount, significantly more than donors typically gave, was set as the default, fewer people participated than if no default had been introduced. But even if fewer potential donors participated, it was possible for the campaign to raise more money because those that did participate gave more, thanks to the higher default. So setting a large amount as the default resulted in a slight increase in average donation size, sometimes offsetting the lower participation. In contrast, a low default gave people permission to donate small amounts, and those people who would have given more without a default no longer felt the need to do so.

As a result, the effects of defaults on total funds raised are different when targeting loyal donors. Donors who strongly identify with the cause or organization and have a history of giving may have already decided whether to participate, but they may be unsure about how much to give. For these loyal donors, a high default amount can result in more funds raised.

For less loyal donors, defaults may have little or no effect on total funds raised, because while more people may participate they will contribute smaller amounts. But even when defaults do not affect the bottom line, choosing carefully which option to suggest can help manage how different kinds of donors will respond. Setting a lower amount as the default would result in more small donations, while setting a higher amount as the default would instead yield fewer, but larger, donations.

We tested these conclusions with the annual alumni fundraising campaign of the University of Chicago Booth School of Business. We sent appeal letters along with pledge cards to previous donors who had not responded to the solicitation mailer sent earlier in that academic year. The pledge card listed three donation amounts, customized based on each person’s prior donation to be approximately half, the same, and double the prior donation. A quarter of the people received the usual card, and for the rest, we randomly selected one of the amounts to highlight and label as “suggested” on the card and in a mention in the letter.

Among these “cold” donors, who had already passed up opportunities to donate in the campaign, setting the lowest amount as the default raised more funds than using the standard appeal or higher defaults. The low default did result in lower donation amounts among those who gave, but this was more than compensated for by the fact that substantially more people chose to give. However, our goal here was to get new people to participate, not necessarily to entice them to give large amounts of money. More recently, we conducted the same experiment in the initial mailings of a new campaign, which targeted all past donors, including frequent donors. In this wave, using the low default reduced the funds raised, because the increase in participation was outweighed by a substantial reduction in the donation amounts of those who gave.

Our research suggests that introducing a default or suggested amount, particularly a high amount, is unlikely to harm fundraising. However, that does not mean that a particular type of default will always have positive effects. Instead, the use of a default should be carefully tailored to the targeted audience. Setting a low default can be effective when encouraging new people to donate, but among your most loyal potential donors, a low default may actually reduce amounts. For those frequent donors, a high-amount default would be better for raising larger donations.

How can you determine the best default for a specific campaign? Ideally, this would involve A/B testing that varies the default amount, along with a no-default control group. While running such experiments is not yet common practice, doing so is well within reach of most organizations and the learning can far outweigh the minimal costs. In the end, identifying the right default-setting strategy can make fundraising more effective.

Indranil Goswami is an Assistant Professor of Marketing in the School of Management at the University at Buffalo.

Oleg Urminsky is a Professor of Marketing and True North Communications Inc. Faculty Scholar at the University of Chicago.